CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made as of the 31st
day of May, 1996 by and between Intelligent Electronics, Inc., a Pennsylvania
corporation ("IE"), The Future Now, Inc., an Ohio corporation ("TFN") , The
Future Now, Inc. of Arkansas, an Arkansas corporation ("TFNA") and XLConnect
Solutions, Inc., a Pennsylvania corporation ("XLC").
Background
A. XLC and TFN are a wholly owned subsidiaries of IE, and TFNA is a
wholly owned subsidiary of TFN.
B. IE and XLC intend to effect an initial public offering of shares of
common stock of XLC (the "Offering").
C. In order to facilitate the Offering, the parties will effect a
restructuring of the corporate organization, following which XLC will be a
wholly owned subsidiary of TFNA.
D. Each of IE, TFN and TFNA (collectively referred to hereinafter as
"IE", except where the context requires "IE" to mean Intelligent Electronics,
Inc.) desires to contribute to XLC, and XLC desires to accept and receive,
certain of the assets and liabilities of IE, TFN and TFNA, respectively.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and covenants contained in this Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Assigned Contracts" has the meaning ascribed thereto in Section
3 hereof.
(b) "Business Day" means any calendar day which is not a Saturday,
Sunday or public holiday under the laws of the Commonwealth of Pennsylvania.
(c) "Contract" means any written or oral contract, agreement,
commitment, lease, license, consulting agreement, supply contract, repair
contract, distribution agreement, purchase order, technology and know-how
agreement, instrument or any other contractual commitment that is binding on any
Person or its property.
(d) "Governmental Entity" means any government and political
subdivisions thereof, court, arbitral tribunal, administrative agency, tribunal
or commission or any other governmental or regulatory body, instrumentality or
authority, whether domestic (federal, state or local) or foreign.
(e) "Liability" means any direct or indirect liability, loss,
damage, cost, expense, contingent liability, loss contingency, indebtedness,
obligation, responsibility, claim, deficiency (including deferred income tax and
other net tax deficiencies), guaranty or endorsement of or by any person,
whether accrued, absolute, or contingent, known or unknown, fixed or unfixed,
liquidated or unliquidated, secured or unsecured, and any other items which, in
accordance with GAAP, would be classified as a Liability.
(f) "Lien" means any mortgage, lien, security interest, pledge,
negative pledge, encumbrance, assessment, title retention agreement, restriction
or restraint on transfer, defect of title, change in the nature of a lien or
security interest, or option (whether consensual, statutory or otherwise).
(g) "Permitted Liens" means (a) Liens for current taxes not yet
delinquent for which appropriate reserves in accordance with GAAP have been
created; (b) statutory liens imposed by law which are incurred in the ordinary
course of business for obligations not yet due to carriers, warehousemen,
laborers and materialmen; and (c) consensual Liens granted on Contributed Assets
with respect to financing obligations assumed by XLC.
(h) "Person" means an individual, a sole proprietorship, a
corporation, a partnership, a joint venture, an association, a trust, or any
other entity or organization, including a government or a political subdivision,
agency or instrumentality thereof.
(i) "Required Consents" means any and all licenses, waivers,
consents or approvals of or from any Governmental Entity, including the
expiration of any periods of time under statutory and regulatory notice
provisions without action on the part of any Governmental Entity, and any and
all approvals, consents or waivers from other parties to leases, licenses,
franchises, permits, indentures, Contracts and other instruments necessary to
consummate the transaction contemplated hereby.
2. Contributions of Assets by IE. Subject to the terms and conditions
contained herein, IE hereby contributes to XLC, free and clear of all Liens
(other than Permitted Liens), the assets of IE which are listed on Schedule A
attached hereto (collectively, the "Contributed Assets").
3. Assignment of Contracts and Contract Rights. IE hereby assigns,
transfers and delivers to XLC all of its right, title and interest in and to all
of the Contracts and contract rights identified on Schedule B hereto (the
"Assigned Contracts") and XLC hereby accepts the Assigned Contracts and agrees
to perform and comply with such Assigned Contracts as if XLC were the original
signatory thereunder.
4. Assumption of Liabilities. XLC hereby assumes only those debts,
liabilities and obligations of IE listed on Schedule C attached hereto (the "IE
Assumed Liabilities"). Except as set forth on Schedule C, XLC does not and will
not otherwise
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acquire, discharge, assume, or become responsible for any debts, liabilities or
obligations of IE. IE agrees to pay and satisfy when due those liabilities and
obligations not assumed by XLC, which, if not paid or satisfied, could result in
a liability to XLC which is not being assumed by XLC. To the extent a
Contributed Asset of IE being sold or contributed to XLC pursuant to Section 2
or 3 hereof is subject to a Lien that is not an IE Assumed Liability, IE
expressly acknowledges that it is retaining such Liability and agrees to pay and
discharge such Liability as the same shall become due.
5. Representations and Warranties.
(a) IE, TFN and TFNA, as applicable, represent and warrant to XLC as
follows:
(1) Corporate Power and Authority. Each of IE, TFN and TFNA has the
requisite power and authority to execute, deliver and perform this Agreement and
to contribute to XLC the Contributed Assets. The execution delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action (corporate
or otherwise) on the part of each of IE, TFN and TFNA. This Agreement
constitutes the legal, valid and binding obligation of each of IE, TFN and TFNA,
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting the enforcement of creditors' rights generally.
(2) Validity of Contemplated Transactions. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (a) violate, breach or contravene any of
the terms, conditions or provisions of the Articles of Incorporation or Bylaws
of IE, TFN or TFNA, (b) violate, or constitute a default under, any material
contract by which such entity or its property is bound, or (c) violate any
material provision of law.
(3) Title to Contributed Assets. Each of IE, TFN and TFNA is in
possession of and has good, valid and marketable title to, or has valid
leasehold interests in or valid rights under contract to use, all of the
Contributed Assets in which it has interest and IE, on a consolidated basis,
with TFN and TFNA, has such title to all of the Contributed Assets. All of the
Contributed Assets are free and clear of all Liens, other than Permitted Liens.
All tangible personal property comprising Contributed Assets is in good
operating condition (ordinary wear and tear excepted) and will be usable by XLC
for its intended purposes.
(4) Accounts Receivable. The accounts receivable that are included
in the Contributed Assets (the "Accounts Receivable") constitute valid
receivables, have arisen in the ordinary course of business consistent with past
practices, and are not subject to any setoff or counterclaim. No part of the
Accounts Receivable is contingent upon performance by IE or any other party of
any obligation, and no agreements for deductions or discounts have been made
with respect to any part of such Accounts Receivable.
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(b) XLC represents and warrants to IE, TFN and TFNA as follows:
(1) Corporate Power and Authority. XLC has the requisite power and
authority to execute, deliver and perform this Agreement and to accept the
Contributed Assets. The execution delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action (corporate or otherwise) on the part of XLC.
This Agreement constitutes the legal, valid and binding obligation of XLC,
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting the enforcement of creditors' rights generally.
(2) Validity of Contemplated Transactions. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (a) violate, breach or contravene any of
the terms, conditions or provisions of the Articles of Incorporation or Bylaws
of XLC, (b) violate, or constitute a default under, any material contract by
which such entity or its property is bound, or (c) violate any material
provision of law.
6. Further Assurances. Each party hereto agrees to cooperate with each
other to obtain, execute and deliver or cause to be so obtained, executed or
delivered, such other instruments, notices, documents, agreements,
acknowledgements or consents (including without limitation, the Required
Consents) and to such further acts as reasonably may be required for the
effective confirmation and consummation of the transactions contemplated
thereby, including without limitation the transfer, or confirmation thereof, of
such other assets as are reasonably necessary or desirable in connection with
the operation of the business of XLC, as such business is described in that
certain Registration Statement dated July 24, 1996, as amended from time to
time, filed with the Securities and Exchange Commission under the Securities Act
of 1933 with respect to a proposed underwritten public offering of the shares of
common stock of XLC.
7. Miscellaneous.
(a) Successors and Assigns. This Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by either
party hereto to any other person except that either party may assign this
Agreement to any of its affiliates.
(b) No Third-Party Beneficiaries. Nothing expressed or implied in
this Agreement shall be construed to give any person or entity other than the
parties hereto any legal or equitable rights hereunder.
(c) Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof.
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(d) Amendment. This Agreement may not be amended except by an
instrument signed by the parties hereto.
(e) Waivers. Either party hereto may (i) extend the time for the
performance of any of the obligations or other act of the other party or (ii)
waive compliance with any of the agreements contained herein. No waiver of any
term shall be construed as a subsequent waiver of the same term, or a waiver of
any other term, of this Agreement. The failure of any party to assert any of its
rights hereunder will not constitute a waiver of any such rights.
(f) Severability. If any provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, such
provision shall be deemed severable and all other provisions of this Agreement
shall nevertheless remain in full force and effect.
(g) Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
(h) Notices. All notices given in connection with this Agreement
shall be in writing. Service of such notices shall be deemed complete (i) if
hand delivered, on the date of delivery, (ii) if by mail, on the fourth business
day following the day of deposit in the United States mail, by certified or
registered mail, first-class postage prepaid, (iii) if sent by FedEx or
equivalent courier service, on the next business day, or (iv) if by telecopier,
upon receipt by the sender of written confirmation of successful transmission.
Such notices shall be addressed to the parties at the following addresses or at
such other address for a party as shall be specified by like notice (except that
notices of change of address shall be effective upon receipt):
If to IE, TFN or TFNA:
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
Attention: President
Telecopier: (000) 000-0000
If to XLC:
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
Attention: President
Telecopier: (000) 000-0000
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(i) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Pennsylvania,
without giving effect to the principles of conflict of laws thereof.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties to this Contribution Agreement have
caused this Agreement to be duly executed as of the date first written above.
INTELLIGENT ELECTRONICS, INC.
By: /s/ Xxxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Secretary
THE FUTURE NOW, INC.
By: /s/ Xxxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Secretary
THE FUTURE NOW, INC. OF
ARKANSAS
By: /s/ Xxxxxxxx X. Xxxx
--------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Secretary
XLCONNECT SOLUTIONS, INC.
By: /s/ Xxxxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Chief Financial Officer
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SCHEDULE A
CONTRIBUTED ASSETS
I. Capital Stock:
IE hereby contributes to TFN all of the issued and outstanding shares of:
XLConnect Solutions, Inc.
XLConnect Services, Inc. (f/k/a Intellicom Solutions, Inc.)
TFN hereby contributes to TFNA all of the issued and outstanding shares of:
XLConnect Solutions, Inc.
XLConnect Services, Inc.
TFNA hereby contributes to XLC all of the issued and outstanding shares of:
XLConnect Services, Inc.
II. Employees: Listing as of May 31, 1996 attached as Annex A-1
III. Accounts Receivable: Listing as of May 31, 1996 attached as Annex A-2
IV. Other Tangible Assets: Listing as of May 31, 1996 attached as Annex A-3
V. Intangible Assets: Listing as of May 31, 1996 attached as Annex A-4
VI. Deferred Items: Deferred taxes and associated accumulated depreciation as of
May 31, 1996, if any.
SA (1)
SCHEDULE B
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ASSIGNED CONTRACTS
All service agreements, and all service components included in bundled
agreements, either in effect as of May 31, 1996 or arising thereafter, relating
to Internetworking, Applications Development, Telecommunications and Managed
Services.
SB (1)
SCHEDULE C
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ASSUMED LIABILITIES
o Accounts Payable: Trade payables relating to the provision of services
(primarily subcontractors) and accounts payable for service parts
o Accrued Expenses:
o XLConnect employee relocation costs;
o legal and other professional fees and expenses;
o restructuring costs for Oracle-based systems supporting PBTH;
o current payroll and benefits liabilities;
o reserves for receivables delinquency.
o Deferred income: Service fees billed and not provided
o Due to Parent: Allocated indebtedness owed to IE
o Litigation: limited to pending XLConnect trademark issue
o Assumed Contracts: Liabilities arising under those service agreements and
service components included in bundled agreements assumed hereunder;
specifically excluding, however, the hardware risk (including without
limitation, risk of return, technical obsolescence, inability to redeploy or
delays with respect thereto) expressly being retained by IE.
SC (1)
ANNEX A-1
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EMPLOYEES
SC (2)
ANNEX A-2
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ACCOUNTS RECEIVABLE
SC (3)
ANNEX A-3
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OTHER TANGIBLE ASSETS (PROPERTY AND EQUIPMENT)
SC (4)
ANNEX A-4
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INTANGIBLE ASSETS
All assets of each IE entity which would be
classified in accordance with GAAP as intangible
assets, including without limitation, all franchises,
licenses, permits, patents, patent applications,
copyrights, trademarks, trade-names, goodwill,
experimental or organization expenses and other like
intangibles, used in connection with the business to
be conducted by XLC.
SC (5)
